AppNexus is positioning itself against the 'broken' system of Facebook and Google in the runup to its IPO

Michael Rubenstein of Appnexus
Appnexus
CANNES, France — We know that AppNexus, the New York adtech company valued at $2 billion, has filed for an IPO, we just don't know when that IPO will be. It was initially thought to be due in Q2 2017 but now it's looking like much later this year.

Meanwhile, AppNexus President Michael Rubenstein visited the Cannes Lions advertising festival this week to take strategic meetings with partners. In fact, News Corp's $10 million investment in AppNexus came out of a breakfast meeting AppNexus held at the Cannes Lions last year, Rubenstein told Business Insider.

We caught up with Rubenstein at the Hotel Barrière Le Majestic on the waterfront in Cannes to ask him where his long-awaited IPO is. Perhaps unsurprisingly, he declined to indicate a date when it might appear. But in a conversation about where he sees AppNexus' place in the world, he did give us some clues as to how the company is positioning itself against its much bigger rivals: Facebook and Google.

The context here is that one of the predominant themes at Cannes this year is that Facebook and Alphabet (via Google) are a "duopoly" who control too much of the online ad ecosystem, they take the lion's share of all new advertising dollars, and clients are chafing at dealing with them as media providers over whom they have declining leverage.

AppNexus has, historically, been one of the louder complainers about the duopoly — for the obvious reason that it wants advertisers to see its platform as a third alternative for their money.

"We have a deep business relationship with Google and we have a deep business now with Facebook, you can't get around the two of them in online advertising," Rubenstein said. And, "without us, they fear that the antitrust authorities would be even more focused on them than they are today."

That said, Rubenstein regards them as being major players in a system that is broken. His clients complain about it all the time. "The issue of brands having access to quality content to advertise against, and have transparency in the marketplace, is a huge issue. I mean Google and Facebook benefit from having opacity in the marketplace. They benefit from people not asking too many questions about where their ads are running and they benefit from real opacity around margins as well."

"So I think that these forces that are coming to bear now are healthy to restoring some balance to a system today that is clearly broken."

The most obviously "broken" part of the system is the fact that clients don't like it when their ads show up on Facebook or Google's YouTube against fake news, extremist sites, or Islamic State jihadi recruiting videos. AppNexus recently kicked Breitbart off its system after a routine partner audit concluded that its content qualified as hate speech.

"Brands are starting to play a healthier role in demanding more transparency around where their ads are running and what content they're supporting on these platforms. Breitbart is a great example. A far more obvious example is Google's jihadi videos on YouTube. I mean, when you have UK government and top-tier brands supporting content they really don't want to be associated with it's a healthy thing for them to start demanding a greater level of control and accountability."

Objectionable though Islamic State is, don't its supporters have a free speech right to publish content on these platforms?

"I don't think there's anything in the First Amendment that says they have a right to receive ad dollars," Rubenstein says.

Another new variable is the new adblock function Google wants to add to Chrome. That function has not yet been launched but it will reportedly allow users to block ads except those which follow a format that Google approves of. AppNexus is one of many companies waiting to see what the adblocker actually does.

When it arrives, it would be another example of Google's power in one market (web browsing) being used to alter the rules in an unrelated market (advertising and publishing). "It could be a real positive for the industry and for consumers" if Chrome blocks abusive or misleading ads that ruin the browsing experience, Rubenstein says. But, "it could obviously be used as a tool to tip the scales toward Google and assert even more control over an advertising ecosystem that they already assert an unhealthy amount of influence over. It could be a bad thing. We don't know yet."